Randomness in Tax Enforcement
University of California - Department of Economics ; School of Law, University of California, Berkeley; National Bureau of Economic Research (NBER)
Joel B. Slemrod
University of Michigan, Stephen M. Ross School of Business; National Bureau of Economic Research (NBER)
NBER Working Paper No. w2512
For most parameter values, increased randomness about how much taxable income an auditor would assess leads to higher reported income and more revenue, When reducing randomness is costly, optimality requires some randomness in assessed taxable Income. Even if reducing randomness g costless, taxpayers may prefer some randomness when the increased revenue can be rebated, so that the government a revenue stays fixed. These results do not rely on the presence of a distortion in labor supply.
Number of Pages in PDF File: 24
Date posted: June 28, 2004